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I’d be happy with a system like this, as long as they made it very clear WHEN you should do it the old way. For example: “Our estimate of your income may be to

I’d be happy with a system like this, as long as they made it very clear WHEN you should do it the old way. For example: “Our estimate of your income may be too high in certain situations, for example if you are a business owner, independent contractor, or receive income from RSU or ESPP sales where the tax basis reported to the IRS is missing or inaccurate. In those cases, you are encouraged to fill out your tax return using the tool of your choice” (Hopefully with links to some options). Otherwise, there’s going to be a lot of tech workers who don’t understand RSU taxation paying thousands/10s of thousands of dollars extra in taxes for no reason. (And yes, I realize some may think this is a feature, not a bug.)

jjnoakes 3y ago
I don't understand why the RSU basis adjustment isn't reported automatically. All of the information is available without my involvement...
patrick451 3y ago
I worry about be one of those. what is it about RSU compensation that is commonly misunderstood?
- firstlink 3y ago
  The IRS requires your broker to report a different cost basis to you than you are entitled to use. It is government-mandated disinformation, not a misunderstanding.
- sgerenser 3y ago
  It’s often the case that you sell a block of RSU stock, and the broker reports the entire sale as a capital gain (e.g. if you sell $50K, then it shows up as a $50K capital gain on your broker’s 1099). But in reality, the gain should only be the difference between the price it was when it showed up in your account and when you sold it (which can actually be a loss), because the basis is already included in your W-2 as earned income.
  - unmole 3y ago
    E-Trade and Fidelity report gains correctly. Which broker doesn't?
    - sgerenser 3y ago
      My recollection is they report it on a “supplemental information” form, not directly on the 1099. If you just do a naive import in TurboTax or similar, you’ll overpay your taxes by thousands.
flagrant_taco 3y ago
Simplifying the tax code would go a long way. We don't need to go all the way towards some flat consumption tax, simply eliminating tax deductions, credits, and write-offs would make calculating a person's tax burden much easier.
- pfannkuchen 3y ago
  Don’t deductions, credits, etc allow the government to incentivize citizens to behave in certain ways? Are you implying that it shouldn’t be in the business of incentivizing behavior?
  - flagrant_taco 3y ago
    Well yes, I would absolutely say the federal government shouldn't be in the business of manipulating markets and consumer behavior. That was never part of our government design in the first place, unless you consider dealing with interstate commerce disputes to fall under that umbrella. Practically though, our tX system and economy is much too complicated to be able to accurately say whether incentives through deductions and credits are a net positive. We can say how expensive they are, but how do we measure the value added by pushing consumers in one direction or another? And if we can't measure its value should the government have that authority?

jjnoakes 3y ago

I don't understand why the RSU basis adjustment isn't reported automatically. All of the information is available without my involvement...

patrick451 3y ago

I worry about be one of those. what is it about RSU compensation that is commonly misunderstood?

firstlink 3y ago
The IRS requires your broker to report a different cost basis to you than you are entitled to use. It is government-mandated disinformation, not a misunderstanding.
sgerenser 3y ago
It’s often the case that you sell a block of RSU stock, and the broker reports the entire sale as a capital gain (e.g. if you sell $50K, then it shows up as a $50K capital gain on your broker’s 1099). But in reality, the gain should only be the difference between the price it was when it showed up in your account and when you sold it (which can actually be a loss), because the basis is already included in your W-2 as earned income.
- unmole 3y ago
  E-Trade and Fidelity report gains correctly. Which broker doesn't?
  - sgerenser 3y ago
    My recollection is they report it on a “supplemental information” form, not directly on the 1099. If you just do a naive import in TurboTax or similar, you’ll overpay your taxes by thousands.

flagrant_taco 3y ago

Simplifying the tax code would go a long way. We don't need to go all the way towards some flat consumption tax, simply eliminating tax deductions, credits, and write-offs would make calculating a person's tax burden much easier.

pfannkuchen 3y ago
Don’t deductions, credits, etc allow the government to incentivize citizens to behave in certain ways? Are you implying that it shouldn’t be in the business of incentivizing behavior?
- flagrant_taco 3y ago
  Well yes, I would absolutely say the federal government shouldn't be in the business of manipulating markets and consumer behavior. That was never part of our government design in the first place, unless you consider dealing with interstate commerce disputes to fall under that umbrella. Practically though, our tX system and economy is much too complicated to be able to accurately say whether incentives through deductions and credits are a net positive. We can say how expensive they are, but how do we measure the value added by pushing consumers in one direction or another? And if we can't measure its value should the government have that authority?